OKR’s: A path to align your project portfolio to your business targets

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Bill Gates

“It’s not what you know, it’s what you can accomplish”

... "As it happens, Intel employed someone who would end up helping me improve my management skills: Andy Grove. A precise, hard-driving guy, Andy oversaw their strategy and operations, and he championed the idea of management by objective. Andy and I became friendly over the years, I studied several of the business books he wrote early on, and Microsoft adopted some of the methods that Intel used. I consider Andy one of the great business leaders of the 20th century.

Andy’s ideas are a basis for the management system called OKRs (Objectives and Key Results) developed by John Doerr, a venture capitalist and a frequent business partner of mine. In his new book, Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World With OKRs, John explains how OKRs work and shows how you can apply them in all sorts of situations”.

Ref. GatesNotes - Management tips from a brilliant business leader [2016]

WHAT OKR´S ARE?

OKR (Objectives and Key Results) can be defined as a goal system or a goal management framework that allows alignment of the different areas of the organization towards a common, results-oriented course.

It is clear that OKR are not only an objective, they must also include a way to measure progress towards that achievement or objective, therefore, the two main parts of an OKR are: firstly, “The objective”, what we want achieve is typically qualitative. The second part of the OKR is the key result, that part that tells us how we are doing and to what extent we have achieved the objective; this second part is quantitative.

The OKR is comprised of a clear goal that defines what is intended and 2-5 (recommended) key results to measure progress towards that goal. In addition, it also has initiatives, which describe the actions necessary to achieve progress towards the key result. This methodology includes a series of rules that help you align, focus, prioritize and measure what is done.

OBJECTIVES THE OKR

The main purpose of OKR´s is to align the goals of the Organization, work teams and members with the definition of measurable results. The definition of actionable indicators or that induces actions by the members of the organization is also sought, that is; as a motivational instrument

Example:

Objective, what we want, subjective: "Improve our health".

Key results, which will reflect progress, quantifiable or measurable:

"Reduce the frequency of calorie and carbohydrate intake at dinner by 50%"

Associated initiatives: "Start a diet consisting basically of salads and vegetables rich in minerals", "Start a" walk-type "walking plan 4 times a week"

HOW DO OKR WORK?

The process is simple and has the following steps:

• The company defines the objectives for the year and for each quarter.

• Work teams establish objectives aligned with the objectives of the organization.

• Team members take a set of objectives and agree on the associated key results.

• The establishment of this must maintain integrity and interconnection with the rest of the essential elements, in addition there must be a frequent feedback loop.

Some additional elements in which the organization can be leveraged for a better use and use of OKR´s are:

• Use of dashboards, in which quarterly objectives and global, departmental and individual goals are shown. This increases the transparency and commitment of the members of the organization.

• OKR´s monitoring provides a regular opportunity to review what happened recently, discuss how recent events have impacted your confidence in delivering value, and collectively take some of the next actions to improve that confidence.

OKR ´S RECORDS ARE THE MOST IMPORTANT PART

A good definition of OKRs includes being lightweight, informative, and easily actionable. Thus, the monitoring meetings will allow:

• Identify impediments in the initiatives and in their definitions,

• The evaluation and proposal of next improvement actions,

• Create a sense of team by proposing joint actions,

• Associate actions with results,

• Celebrate results incrementally and

• Motivate team members.

CHARACTERISTICS OF AN OKR

The Objectives that are defined must have the following characteristics:

• Be ambitious: an empirical rule states that if you achieve 100% of your OKRs, they were not ambitious enough, they must be established with the aim of achieving between 60 and 70%.

• Finite duration: you decide the renewal frequency, it can be quarterly, monthly or weekly. It is important that you keep in mind its validity over time, so you can increase the motivation of the team.

• Short and simple: avoid complex objectives, which require long definitions or long explanations. If it cannot be expressed in a sentence, there may be other non-explicit elements involved.

As for how you are going to measure the objectives or Key Results, it is recommended that:

• Are quantifiable, that it can be objectively verified to what extent it has been achieved.

• They are not activities; they should be more of a “what” than a “how”.

• Are generated by teams and not by management.

• Are adjustable, one hundred either at the time of their own definition, throughout their validity or "useful life" or even at the end of the fiscal year or defined review period.

In summary…

• The main goal of the OKR's is to connect the objectives of the company, the team and the staff to measurable results, so that everyone can move in the same direction. If used correctly, the OKR method can generate more transparency, alignment, focus and agility in the team and in the organization.

• It is a very effective tool to transform strategic planning into tangible and real actions and results. Companies often turn to OKRs to set inspiring goals and expand.

• OKR's promote a culture of proving, error and learning, as part of a process of continuous improvement, an agile vision oriented to the product and to the customer.